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Uruguay stands out in Latin America for being an egalitarian society, with high per capita income and low levels of poverty and inequality. In relative terms, its middle class is the largest in Latin America and the Caribbean and accounts for more than 60 percent of the population.

Following the 2002 crisis, sound macroeconomic management and favorable external conditions supported a prolonged period of economic expansion. However, growth has slowed since 2015, amid normalizing commodity prices, the health crisis triggered by the COVID-19 pandemic, and climate shocks, such as the severe drought that affected the country between October 2022 and August 2023. Despite these challenges, Uruguay maintained prudent fiscal management anchored in its fiscal rule and continues to have the lowest sovereign spreads in the region. 

In 2023, the economy grew by 0.7 percent, largely reflecting the drought-induced decline in agricultural production. In 2024, the economy rebounded, expanding by 3.1 percent, driven by exports and private consumption, supported by improvements in the labor market and inflation remaining within the Central Bank of Uruguay¡¯s target range.

Despite its economic and social stability, structural constraints continue to hinder the country¡¯s ability to close key development gaps. An estimated 6 percent of the population lives in poverty, based on the international poverty line of $6.85 per person per day (2017 PPP). However, poverty rates are approximately twice as high among children, adolescents, and the Afro-descendant population. Income inequality has remained broadly unchanged in recent years, with the Gini Index remaining at about 40 points. Although this is among the lowest in Latin America, it remains high compared to countries outside the region.? 

Comparatively low educational outcomes given the country¡¯s income level, limited global integration, and vulnerability to climate shocks are among Uruguay¡¯s most pressing structural challenges.

Uruguay has emerged as a regional leader in the development of innovative financial instruments to address climate change. A key milestone in this agenda is the approval of the first World Bank loan whose financing conditions are linked to the achievement of ambitious climate goals. Under this operation, Uruguay could reduce its interest payments by up to US$12.5 million if it achieves a verifiable reduction in the intensity of methane emissions from the livestock sector. 

Last Updated: Apr 23, 2025

Å·ÃÀÈÕb´óƬ Group (WBG) has supported Uruguay¡¯s development for nearly 80 years through a wide range of instruments such as loans, insurance, grants, technical assistance, and knowledge sharing.

Uruguay¡¯s relationship with the WBG has evolved over time and is now focused on identifying in-depth solutions to more complex development challenges. Many of these solutions have not only benefited Uruguay but have also become global public goods that can be replicated in other countries across the region and the world.

A recent example is the loan approved in November 2023 by the World Bank¡¯s Board of Executive Directors, which marked a global milestone as the first-ever to link financial conditions to the achievement of ambitious environmental goals. This financial innovation aligns with the World Bank¡¯s new Evolution Roadmap, which seeks to create concrete incentives for countries to incorporate global challenges into their development strategies.

In May 2024, the International Finance Corporation (IFC) provided a partial credit guarantee of up to US$67 million to help finance the world¡¯s largest electric ferry, owned by Buquebus. This operation is IFC¡¯s first blue operation in Uruguay and the first of its kind in the global electric maritime transport sector. 

Similarly, World Bank support for Uruguayan institutions and public services has facilitated significant knowledge sharing with countries such as the Kyrgyz Republic and Papua New Guinea (energy), T¨¹rkiye and Uzbekistan (health and education), and more broadly with Argentina, Bolivia, Chile, Colombia, El Salvador, Honduras, Mexico, Nicaragua, Panama, and Paraguay. More recently, Botswana, Namibia, and the Kyrgyz Republic have benefited from knowledge exchanges on sustainable agriculture and animal traceability.

This approach is positioning Uruguay as a global knowledge hub and shaping the World Bank¡¯s work program in the country.

A key milestone in this strategic relationship is the establishment of a new Joint WBG Representation in Montevideo. In 2024, Uruguay became one of the first countries to host a joint office integrating three WBG institutions: the International Bank for Reconstruction and Development (IBRD), which works with the public sector; the International Finance Corporation (IFC), which supports private sector development; and the Multilateral Investment Guarantee Agency (MIGA), which provides guarantees to facilitate investment. This new structure offers the country a streamlined entry point to access the full range of WBG services¡ªfinancing, advisory, and guarantees¡ªall from a single office.

The WBG¡¯s 2023¨C2027 Country Partnership Framework (CPF) with Uruguay defines a forward-looking agenda focused on three strategic priorities: 

1. Adapting the economy to climate change and strengthening fiscal resilience.

1. Creating better job opportunities.

1. Expanding inclusive access to quality public services.

The WBG¡¯s current portfolio totals US$1.1068 billion. It includes US$441.5 million in a Development Policy Loan and three IBRD-financed investment projects in the education, agriculture, and e-government sectors; a US$539.3 million MIGA guarantee for the financial sector; and US$126 million from IFC to support private sector initiatives in food, Fintech, and renewable solutions¡ªUS$86 million from its own account and US$40 million in mobilization. 

Last Updated: Apr 23, 2025

Å·ÃÀÈÕb´óƬ Group has worked with successive Uruguayan governments in key areas such as infrastructure, transport, agriculture, natural resources, education, sanitation, and health.

Since 2010, more than $2 billion in loans from the International Bank for Reconstruction and Development (IBRD) have been approved to finance investments in infrastructure, agriculture, human capital, climate change adaptation, social protection, support for small and medium-sized enterprises, and institutional strengthening. 

as well as to build the government¡¯s capacity to protect the most vulnerable populations from external shocks through contingent financing. Moreover, the World Bank has channeled multiple grants, and provided analytical and technical support in areas relevant to the country¡¯s development. These loans have also helped build the government¡¯s capacity to protect the most vulnerable populations from external shocks through contingent financing instruments. Additionally, the World Bank has channeled multiple grants and provided analytical and technical support in areas relevant to the country¡¯s development.

The International Finance Corporation (IFC) has supported the agribusiness sector, infrastructure, the financial system, tertiary education, and industry. The Multilateral Investment Guarantee Agency (MIGA) has mobilized more than US$880 million in private investment in banking, microfinance, and industry.

Key results include:

Knowledge Exchanges: Over the past 12 years, Uruguay has participated in more than 30 knowledge exchanges organized by the World Bank Group, covering five of the six regions where the WBG operates. Topics have ranged from livestock traceability (Botswana, Namibia, Kazakhstan, the Kyrgyz Republic, Nicaragua, and Paraguay), prevention of non-communicable diseases (Chile, Argentina, T¨¹rkiye), and digitalization of public services (Chile, El Salvador), to road maintenance using performance-based contracts (Morocco), the use of ICT in education (Armenia, Kyrgyz Republic), and agricultural information systems (Mexico).

Uruguay has also hosted delegations from the Kyrgyz Republic and Papua New Guinea (energy sector reform), Zimbabwe and Botswana (budget planning), Nicaragua (statistical capacity building), Costa Rica (water management), and Uganda (private sector actors in education), the latter with support from IFC.

Digital Government: The ¡°Improving Service Delivery to Citizens and Businesses through E-Government Project¡± (PROMESEG) significantly enhanced connectivity and access to remote education in rural areas. More than 1,200 schools benefited from virtual classes, including subjects like English, helping to close the education gap in underserved communities. In addition, from 2018 to 2023, over 175,000 people accessed government services through a multichannel citizen service platform (phone, in-person, chat, social media, email), enabling easier access to online procedures.

Building on the success of PROMESEG, in 2023 the World Bank approved a new US$16 million loan to continue advancing the digital transformation of the State. This new operation focuses on strengthening public financial management within the Ministry of Economy and Finance, implementing data analytics tools, and integrating climate considerations into financial, budgetary, and fiscal planning. It also aims to enhance consumer protection and promote market competition.

Climate Insurance: In 2013, the World Bank and Uruguay¡¯s state-owned electricity company UTE signed a pioneering contract to provide insurance coverage against the dual risks of drought and high oil prices. This transaction¡ªvalued at US$450 million¡ªwas the largest of its kind in the market and the first commodity hedge agreement between the World Bank and an emerging economy. It helped the utility mitigate financial losses when low rainfall reduced hydroelectric generation, forcing reliance on more expensive thermal generation using imported fuels.

Knowledge Agenda

Å·ÃÀÈÕb´óƬ also produces a series of strategic analytical studies. Recent reports include:

• ?(An Unfair Fight) on how gender gaps affect the Uruguayan economy.

• , which analyzes the successes of the country¡¯s robust social inclusion agenda, but also reveals stubborn pockets of exclusion.

• (Just in Time) on aging, technological change, skills and labor regulations in Uruguay in the future.

Last Updated: Apr 23, 2025